Iranian Suezmax attack - insurance implications

Amidst
heightened tensions in the Middle East, an Iranian Suezmax was damaged
by an alleged rocket attack later last week in the Red Sea.

The explosion caused an oil spill, which was brought under control,
according to Iranian news agency, IRNA and the crew was reported to be
safe.

Jonathan Moss, DWF Head of Marine & Trade, outlined the potential cost to the insurance market.

He said: "Marine insurance, Cargo and Hull & Machinery cover
incorporating War Risks, is uncontrollably linked with geopolitical
conflict. This latest incident will drive insurers to raise further War
Risk insurance rates for vessels operating in the region, over and above
the tenfold increase to rates since the attacks on tankers in May.

“Shipping companies operating in the region will be forced to absorb
these added costs with affordable insurance in this high risk zone
becoming harder to find. This could lead to cost-cutting measures in
other areas of maritime trade.

"The events leading to the attack in the Red Sea, off the coast of
Saudi Arabia, are uncertain. There were reports that missiles struck the
tanker and an accusation that Saudi Arabia had committed an act of
terrorism while the vessel was carrying oil to Syria.

“Whether this was an act of terrorism or indeed a breach of
international sanctions is of crucial significance in determining
whether and how cover might respond, if at all.

“What is certain, however, is that the continued instability and
unpredictability in the region will have an adverse effect on sea trade,
will reinforce the argument that the UK has too few naval assets to
protect its interests in the area, and will add to the growing trend of
increasing marine insurance premiums," he warned.